“For the past few years, Apple shares have been judged by one metric on Wall Street: iPhone unit sales. As iPhone growth has fluctuated, so has the stock price,” Neil Cybart writes for Above Avalon. “Analysts have been infatuated with quarterly iPhone sales gyrations and the impact they may have on Apple earnings and the stock. However, things are changing. The iPhone’s influence over Apple’s stock is subsiding on Wall Street.”
“Over the past year, AAPL shares have outperformed the overall market. There are now questions regarding what has driven a 53% increase in Apple’s stock price from the bottom experienced in May 2016,” Cybart writes. “Is Apple’s services narrative finally catching on Wall Street? Are investors becoming increasingly optimistic about iPhone sales prospects?”
“It may be easy to assume Apple services or new iPhones may have been responsible for much of Apple’s latest stock outperformance. However, I don’t think those factors alone were able to drive a 50% increase in Apple’s share price,” Cybart writes. “My theory is that the iPhone no longer has the same kind of influence over Apple shares as it once did. Instead, Apple has turned into a balance sheet optimization story on Wall Street. Apple’s growing net cash balance (now standing at an all-time high of $158 billion) has taken the place of iPhone unit sales growth as the most influential variable impacting Apple shares.”
Much more in the full article – recommended – here.
MacDailyNews Take: It took years, but people are finally grasping the sheer enormity of Apple’s cash mountain and, finally, valuing it.
SEE ALSO:
The fabulous Apple cash machine – May 6, 2017
Apple’s unequaled $250 billion cash pile draws calls for buybacks, acquisitions as President Trump’s tax revamp looms – May 1, 2017
Apple cash balance is near $50 per share – May 1, 2017
Apple has turned into a cash-producing machine investors should not ignore – March 23, 2017
If Apple’s cash hoard was its own company, it would be the 13th largest in the world – January 31, 2017
Apple’s cash mountain enough to buy every major sports team in the world – with $60 billion left over – November 4, 2015
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
The KISS Principle (analcyst version):
Keep
It
Stupid,
Simple.
Sometimes I think these guys can only keep one thing in their heads at a time. Is it all the amphetamines? /snark
Gee Derek you are really boosting the intelligence of people. A whole one thing in their head. That’s a pretty enormous feat for some.
*guffaw*
–>zero
It’s funny in a capitalist culture NOT to value cash, and lots of is, as a metric.
It appears true greed only values future growth. It’s not what a company has today, it’s always the big payoff for tomorrow. Besides, it’s easier to swindle investors with a metric that can’t be measured. Reserve cash you can measure but future growth can’t be measured. Apple’s cash reserve is said to be worth almost nothing to Wall Street. Maybe because it’s being held overseas but I’m not sure if that’s the reason. Apple could buy a couple of Netflix companies with its reserve cash but yet Netflix is valued far higher than Apple in terms of P/E. It’s so weird to me.
I always find it puzzling how Wall Street believes two birds in a bush are worth more than a bird in hand which is the opposite of what I’ve always been taught. I don’t understand Wall Street’s way, but America has been a credit society for a long time and it’s common for people to live using credit cards which represent money not yet earned. I believe that’s how Wall Street thinks.
I remember RIMM had a huge P/E based on future earnings until the company collapsed like a house of cards. Wall Street swore to investors RIMM had unlimited potential for years to come until the actual truth could no longer be hidden. By then, the greedy big boys had already dumped and ran. Wall Street kept insisting the iPhone was a goner but yet the iPhone remains to this day. I still can’t figure if those analysts were stupid or just lying SOBs. Likely, they’re both.
that is no joke.
several years ago i went to get a $10K loan to buy some furniture for our new house and was turned down by wells fargo bank, who was underwriting a sale by the furniture store were were working with.
despite the fact that i owned another house outright, free and clear, and had brought along a current bank statement showing that i had over $100K in one my savings accounts.
they had the temerity to tell me how much cash i possessed was “irrelevant” and that i lacked a credit history – which was total bs. i had a long and positive credit history and had just been approved for the loan to buy the new house by another bank who observed that my credit history and rating was “sterling”
they then approved the loan in my wifes name who herself owed about $30K on her various charge accounts and was making the minimum monthly payments.
so, she was judged to be a better loan risk than me.
i took that as an indication that the american financial system was seriously screwed up in its priorities.
i also came away with a better appreciation of why people were forever robbing wells fargo stage coaches back in the old west.
I was under the impression AAPL was more volatile due to lower institutional ownership of outstanding stock (individual stock owners make up a larger percentage (up to double)) compared to GOOG, MSFT or AMZN. As such less, volatility now might better indicate individual stock owners are more comfortable with Apple’s policies than ever and/or are jaded with news from Wall Street to sell stocks.
Apple gets a lot of negative news coverage and I think that can definitely add to Apple’s volatility. Apple is always in the news for one nasty rumor or another. It seems as though there are many people who go out of their way to defame Apple. There must be some agenda behind it. Why would an analyst need to tell people to sell Apple to buy another stock? Just tell potential investors to buy a particular stock and leave Apple out of the conversation. Every little thing Apple does shouldn’t have a need to be criticized. If that’s the case, why isn’t there more criticism for companies like Smith & Wesson or Colt Arms? They make dangerous products that cause plenty of harm to ordinary citizens.
Well, you were under the wrong impression.
e·nor·mi·ty
iˈnôrmədē/
noun
1.
the great or extreme scale, seriousness, or extent of something perceived as bad or morally wrong.
I don’t think MDN really means “It took years, but people are finally grasping the sheer “enormity” of Apple’s cash mountain” do they?
Fairly certain they do, Einstein.
https://www.merriam-webster.com/dictionary/enormity
Your snarkiness aside, those 3rd and 4th definitions are recent concessions to the fact that people have taken to misusing this word, much as people insist on saying “irregardless” or using the word “graphic” to mean violent or sexual. Sorry Balls, but the original and primary meaning(s) of enormity pertain to negative connotations. Dictionaries include common usage in their definitions even when it is a corruption of the word’s proper intent. Look that up.
The correct word is ‘enormousness.’
I always thought it was valued based on the price of a breakfast sandwich at the gas station on the way to the exchange. Shit. Now I’m all confused.
Personally, I think it has a lot to do with the current buzz of AR and Apple’s ability to deliver when they’re ready to. The narrative has always been that, “Apple is behind” When they fail to produce a competing product or technology. But as history has shown (and Wall St. constantly forgets) is that Apple is extremely adept and capable of competing where and when it needs to.
I believe WWDC finally woke some people up and Apple did demonstrate that they are indeed capable of continuing to innovate in areas where most thought they were falling behind.
1. As I said above, the big one, was AR which is a part of Apple’s AI push – which was everywhere at WWDC.
2. Making the iPad a much more productive platform.
3. Significant updates to the Mac, including the iMac Pro and eGPU support in macOS
4. Answering the “smart speaker” issue with a highly focused product targeting Apple Music subscriptions.*
This opens the eyes of those who thought maybe Apple is just sitting around and doing nothing. Now maybe they’re thinking Apple is not only hard at work on certain technologies and projects, but that they’re also thinking about developing and producing them in a way that makes them unique from competitors.
* And before anyone says anything about the HomePod… If Apple sells just several million, it becomes another billion dollar product in Apple’s line-up. And while it will mainly appeal to Apple Music subscribers, there are currently upwards of 30 million of them. And it’s another product that ties into a service.
If AAPL is being pushed up by rumors of Apple innovation in automobiles or AR or some other area, then that is pretty darn funny. It would also make sense, because the same type of things are used to justify the elevated P/Es for Google and similar companies.
Speculation on growth-supporting rumors…the U.S. stock market is due for a sharp fall, I think.